HSG Enterprises is purchasing a $10 million machine. It will cost $1,000,000 to transport and install the machine. The machine has a depreciable life of five years and will have no salvage value (straight-line depreciation). The machine will generate incremental revenues of $7 million per year along with incremental costs of $1 million per year. If HSGs marginal tax rate is 20%, what are the annual incremental earnings (net income) associated with the new machine?

2,070,000

3,040,000

1,950,000

1,000,000